General Mills, Inc. (NYSE:GIS) Q3 2015 Earnings Conference Call - Final Transcript

Mar 18, 2015 • 08:30 am ET

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General Mills, Inc. (NYSE:GIS) Q3 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Fiscal 2015 Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, March 18, 2015. I would now like to turn the conference over to Kris Wenker, Senior Vice President, Investor Relations. Please go ahead.

Executive
Kristen Smith Wenker

Thanks, Operator. Good morning, everyone. I'm here with Ken Powell, our CEO; Don Mulligan, our CFO; and Bethany Quam, who's President of our Convenience Stores and Foodservice segment. Before I turn the call over to them, I'll cover my usual housekeeping items.

Our press release on third quarter results was issued over the wire services earlier this morning. It's also posted on our website, if you still need a copy. You can also find slides on our website that supplement this morning's remarks. Our remarks will include forward-looking statements based on management's current views and assumptions. And the second Slide in this morning's presentation lists factors that could cause our future results to be different than our estimates.

So with that, I'll turn you over to my colleagues, starting with Don.

Executive
Donal Leo Mulligan

Thanks, Kris, and good morning, everybody. Thank you for joining us today.

Slide 4 summarizes our results for the third quarter. Net sales totaled $4.4 billion, down 1% due to foreign currency effects. On a constant-currency basis, we posted 3% growth in net sales. Segment operating profit totaled $698 million, up 1% as reported and up 3% in constant currency. Net earnings decreased 16% to $343 million, and diluted earnings per share were $0.56 as reported. These reported results include $0.07 per share of restructuring and project-related charges, a $0.05 decline in mark-to-market valuation of certain commodity positions, $0.01 of acquisition integration costs and a $0.01 charge related to Venezuela currency devaluation. Excluding these items affecting comparability, adjusted diluted EPS was $0.70, up 13% from $0.62 a year ago. Constant currency adjusted diluted EPS increased 15%.

Slide 5 shows the components of total Company net sales growth. Pound volume reduced sales by 1 percentage point, while mix and net price realization added 4 points sales growth. Foreign exchange was a 4-point drag on reported net sales growth. The Annie's acquisitions contributed 1 point of volume growth and 1 point of sales growth in the quarter.

Let's turn to segment results. Slide 6 summarizes US. Retail performance. Net sales were up 1% led by double-digit gains in Snacks and Yogurt. Net sales for our Cereal business financially matched last year's level, while Meals and Baking Products were lower for the period. Annie's sales, which are included in the Snacks and Meals totals, contributed 2 points of net sales growth for the segment. US Retail operating profit increased 1% in the quarter to $521 million. We continue to see excellent growth in our Convenience Stores and Foodservice segment.

As you can see on Slide 7, net sales in the quarter increased 6%, and segment operating profit was up a robust 11%. Our six focus platforms are leading this growth with